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Landlords and the Small Claims ProcessMany landlords come to meet our firm about suing their former tenants in Small Claims Court.  Most of them leave our office disappointed.  

This article is not about what to do when you secure an order from the Landlord and Tenant Board.  Those orders can be traversed, and enforcement commenced relatively easy.  This article is about suing for damages, unpaid rent, or unpaid utilities.

Prior to the Residential Tenancies Act, anything that occurred post tenancy would be handled in a civil court like the Small Claims Court.  That is no longer so.

In Grewal v Behling, 2013 CanLII 84115 (ON SCSM), 2013 CanLII 84115 (ON SMSM), Deputy Judge Winny dismissed a claim for 2 months of rent for want of Jurisdiction.  In his order he set out the reasons for his dismissal:

The Board possesses exclusive jurisdiction to determine applications over which it has jurisdiction, under s. 168(2) of the Residential Tenancies Act, 2006, S.O.  2006, c.  17, which provides:

(2) The Board has exclusive jurisdiction to determine all applications under this Act and with respect to all matters in which jurisdiction is conferred on it by this Act.

11.              Exclusive jurisdiction means that if a matter is within the Board’s jurisdiction within the meaning of s. 168(2), no other tribunal or court can have jurisdiction over that matter.  Simply put, if the Board’s exclusive jurisdiction is triggered, the court’s jurisdiction is ousted: Fraser v. Beach (2005),2005 CanLII 14309 (ON CA), 75 O.R.  (3d) 383 (C.A.).

So what does this decision actually mean for landlords?  It means that if a landlord became aware of an issue OR could have became aware of an issue with the residential unit, while the tenant still had possession of the rental unit,  the claim MUST be brought at the Landlord and Tenant Board.

The good news about this is that it is actually much cheaper to bring an LTB Application that it is to go through the small claims process.  The bad news is you must be proactive.  Lets say for example your tenant has given you notice they are leaving.  A big mistake landlords make is they will wait to do a property inspection until the day the tenant is leaving.  The landlord would have reasonably become aware of the damage at that time,  and the Landlord and Tenant Board would have exclusive jurisdiction to hear the matter.  Except depending on the time of day, it may be to late to file anything.

This is actually dealt with in Finney v Cepovski, 2015 CanLII 48918 (ON SCSM);  Justice Winny again found:

23.      In Merlihan v. Hunter, [2009] O.J.  No.  (Sm.  Cl.  Ct.), at para.  11-13, I held that the landlord could have and ought to have exercised the statutory right of inspection, which would have permitted discovery of a damage issue prior to the tenant’s departure.  There was an existing application for early termination for arrears of rent and the landlord could have asked for compensation for the damage in that same application.  Therefore the board’s exclusive jurisdiction under s.  168(2) of the Residential Tenancies Act, 2006 was triggered and the court’s jurisdiction over that issue was ousted.

24.              On the other hand, in Mercier v. Hawco, [2014] O.J.  No.  56 (Sm.  Cl.  Ct.), I found that the court had jurisdiction over a claim for damage to the premises which occurred after the tenant vacated the premises.  The tenant had left pets in the unit for 24 hours after moving out, during which time they caused the damage.

25.              The case at bar is similar to Merlihan v. Hunter, supra, in that the damage could have been discovered earlier through an inspection of the premises and could in law have been put to the board, which dealt with an application between these parties.  If it had been discovered earlier, the damage could have been made part of the application as issued, or given its discovery after the application was launched, could have been made part of the application by amendment pursuant to ss.  200(1) or 201(1)(f) of the Act.

26.              The statutory right of inspection under s.  27 of the Act is there for several purposes.  One of them as expressed in s.  27(1), para.  4, subpara.  i, is for “the purpose of determining whether or not the rental unit is in a good state of repair...”  While it may be an inconvenience to landlords if the law effectively requires an end-of-tenancy inspection simply to protect against the potential jurisdictional conundrum seen in this case, in my opinion that inconvenience is justified compared to the alternative of routinely causing simple residential tenancy matters to be divided into two separate proceedings before two different tribunals.

27.              In my view the two recent appellate decisions reviewed above - Efrach and Spirleanu -  support that result in this case.  The damages could have been addressed by the board if the landlord had discovered them earlier through reasonable diligence.  The essential character of this claim for damage to the rented premises is an aspect of residential tenancies that is expressly governed by the Act.

28.              The claim for compensation for damage to the premises is dismissed for want of jurisdiction.

UPDATE: This was futher enforced today in a recent Divisional Court case:

In the recent decision of Kiselman v. Klerer, 2019 ONSC 6668 (CanLII) an appeal from the Small Claims Court as Mr. Kiselman’s Small Claims Court matter was dismissed due to jurisdiction. MULLIGAN J. agrees with the interpretation of the Small Claims Judge in stating the following:

Analysis

[7]               Section 89(1) of the Residential Tenancies Act provides:

A landlord may apply to the Board for an order requiring a tenant to pay reasonable costs that the landlord has incurred or will incur for the repair of or, where repairing is not reasonable, the replacement of damaged property, if the tenant, another occupant of the rental unit or a person whom the tenant permits in the residential complex wilfully or negligently causes undue dame to the rental unit or the residential complex and the tenant is in possession of the rental unit. 

[8]               Section 207 of the Residential Tenancies Act deals with the monetary jurisdiction of the Board, providing:

207(1)  The Board may, where it otherwise has the jurisdiction, order the payment to any given person of an amount of money up to the greater of $10,000 and the monetary jurisdiction of the Small Claims Court.

[9]               I pause to note that the time that this matter was dealt with, the monetary jurisdiction of the Small Claims Court was $25,000.  As noted, the claim brought by the landlord in this case was for $17,166.55 in rent arrears and property damage.    

[10]           This issue has been considered in a number of decisions in Ontario.  In Mackie v. Toronto (City), 2010 ONSC 3801 (CanLII), Perell J. noted at para. 43:

It is, therefore, my opinion that the Board has exclusive jurisdiction to resolve the Plaintiffs’ repair claims…From a jurisdictional perspective, it is the substance and not the form of the claim that matters, and the substance of the Plaintiffs’ claim is a repair claim between a landlord and tenant that is within the monetary jurisdiction of the Board. 

[11]           In Fong v. Lemieux, [2016] O.J. No. 2695, T. Marshall, Deputy J., relied on the decision of Perell J. in Mackie and stated at paras. 61-62:

[61]  The Board has the expertise and day to day experience in handling matters pertaining to what is before the Court today, namely, rent arrears and damage claims to rental units.  While it is true such claims have to be in the Superior Court of Justice for claims above $25,000.00 [per s 207 of the Act], the Board deals with such smaller claims more expeditiously than if it were a Superior Court of Justice matter, even a Small Claims Court matter.  This is a hallmark of the Board proceedings. 

[62]  I accept a broad interpretation of Mackie pays no heed to provisions in the Act as to certain consequences whether a tenant is in possession of a rental unit or is a former tenant.  In my view, this difference is ill-founded.  If an issue arose out of a landlord and tenant relationship, that the tenant has moved out does not change the underlying character of the dispute, in the matter before the Court, rent arrears and damage to the unit…

[12]           In Effrach v. Cherishome Living, 2015 ONSC 472 (CanLII), Horkins J., sitting on appeal, dealt with an order of a deputy Small Claims Court judge dismissing a landlord’s claim in Small Claims Court for lack of jurisdiction.  Horkins J. reviewed the legislation and Justice Perell’s decision in Mackie, and summarized the law as follows at paras. 5-6

[13]  The jurisdiction of the Landlord and Tenant Board is set out in the Residential Tenancies Act.  The Board has exclusive jurisdiction to determine all Applications under the Residential Tenancies Act with respect to all matters in which jurisdiction is conferred on it by the Residential Tenancies Act.  The Board has authority to hear and determine all questions of law and fact with respect to all matters within its jurisdiction under the Act.

Where the Board has jurisdiction, the Small Claims Court has no jurisdiction because the jurisdiction of the Board is exclusive and not concurrent.

And thus further echoes the cases as mentioned previously mentioned. If you believe there may be damage to your rental unit, don't wait!  

 

Had the Landlord done an inspection a week before the tenant vacated,  they could have done an L2 (Damages Only) application,  filed it right away, got a hearing,  and they could get an enforceable order from the Landlord and Tenant Board.

A major part of any type of litigation will be if a person "slept" on their rights.  As a landlord you have a statutory power to perform reasonable inspections.  You can actually evict a tenant for not allowing you in to conduct them.   If you have any questions about inspections, damages, remedies, we offer a free 15 minute phone consultation and al a carte legal services.  Give us a call.

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